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||15 January 2010
Vietnam: Gold traders plan to shut down exchanges ahead of deadline
Operators of gold exchanges in Vietnam said they would likely shut down sooner than March 30 as required by the Government following the central bank’s directive asking banks to stop giving loans to gold investors, reported VNBusinessNews.com.
The central bank on Tuesday asked banks to put on hold all loans for investors trading gold on the exchanges, as well as to retrieve loans already disbursed for these traders.
Pham Hoang An, director of Sacombank Gold Exchange, told the Daily on Wednesday that when the news broke on Wednesday, many investors were stunned and the liquidity on Sacombank gold exchange fell sharply.
Therefore, he said, the shutdown of local gold exchanges would come earlier than the deadline of March 30.
Sacombank’s gold exchange also has plans to narrow its operations as “the exchange has stopped opening new accounts for investors since last week and made it easy for those investors who want to close the accounts now,” An said.
Meanwhile, Huynh Duy Sang, deputy director of the gold exchange of Asia Commercial Bank (ACB), said the central bank’s new decision was suitable at this time when liquidity on gold exchanges was so low.
He explained even if customers continue taking out loans from banks to trade in gold, it would be risky for both the customer and the lender, and further complicate the job of closing investors’ positions in the future.
To abide by the central bank’s decision, Sang said ACB would not give new loans for investors on the exchange while old loans would stand until the customers close their accounts.
“The deadline is still months away so it would not so difficult for investors to stop their gold trading positions in the best way and for banks to retrieve debts,” he added.
However, banks continue to maintain their operation of lending physical gold.
Nguyen Thi Kim Xuyen, deputy general director of DongA Commercial Bank, said if customers are eligible to borrow gold, the bank is ready to meet the demand. evertheless, the conditions to borrow gold at this bank are fairly strict so the bank does not give loans in gold to gold speculators.
An executive from Saigon Commercial Bank (SCB) said the bank still gave loans in gold as usual but the demand of this type had declined much due to gold price volatility.
“Therefore, outstanding loans in gold at our bank have fallen while mobilistion in gold has increased,” she added. Therefore, the bank is considering cutting borrowing rates on gold soon for the second time this month.
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